NBN defends satellite deals

Malcolm Turnbull, above, and Mike Quigley, below, at a hearing into the NBN in Sydney on Monday.

NBN Co has been accused of taking highly unusual risks with $660 million in taxpayers’ funds by signing contracts to build and launch satellites without securing their orbital parking spots first.

Satellite experts yesterday backed the federal Coalition’s criticism of NBN for signing the contracts for the two satellites, which must be built and launched by 2015.

The deal, announced in February, is designed to provide high-speed broadband for up to 200,000 premises in areas too remote for fibre-to-the-home or wireless internet.

But at a parliamentary committee hearing into the NBN in Sydney yesterday, the company’s chief executive, Mike Quigley, acknowledged it had not secured permission to use the orbital parking spots for the satellites.

He said NBN Co expected it would get permission but that there was a “very, very small” possibility that the satellites would have to be launched into space even if they did not have formal permission to be parked in their proposed location.

Mr Quigley added that the satellite would need to be physically modified if it was given a different slot because the equipment was specifically built to only work at certain angles.

The comments came during tense questioning by Coalition communications spokesman Malcolm Turnbull, who said NBN Co should have secured the orbital slots before committing to the deal. “Are you leaving open the possibility, albeit small, of launching a satellite into a slot prior to it being formally allocated? Is the answer to that question yes?” Mr Turnbull asked repeatedly.

“I’m not answering ‘have you stopped beating your wife’ questions,” Mr Quigley replied. “If we came to the position where the formalities weren’t completely finalised we would probably have a discussion with the International Telecommunication Union [which organises slots] about launching. “[Launching satellites without final permission] is not without precedent . . . and the advice from our people is exactly the same advice we’ve had from experts around the world who have been through this process numerous times.”

But New York-based satellite expert and Argosat partner Graeme Shaw said the process of ordering a satellite without securing the slots was risky and highly unusual.

“You absolutely need an orbital slot that has been coordinated with other satellites nearby so you can prove you won’t interfere with them,” he said. “The area they’re planning to put the satellites in is not particularly well-used so it is possible to make a filing and get approval.

“But it’s still a process you can’t shortcut that could take many years and it’s not a certain thing.”

Mr Shaw said he was involved in a company that launched its satellite without formally completing its filing, which then went bankrupt and was forced to sell its assets.

NewSat is an Australian satellite service provider that lobbied the federal government to spend the money on renting its satellites instead. Its chief executive Adrian Ballantyne said NBN Co’s approach was highly risky. “The most difficult part of the space project is having the orbital slot because there are only about 180 in the world and we spent five years negotiating for ours,” he said. “Recent auctions of orbital slots have gone for $50-$100 million because the process is like pulling hen’s teeth. The standard process is you get the slot, find the customers and then find the funding to launch.”

Mr Turnbull said it was common sense to get the orbital parking spaces finalised first and that he was surprised at Mr Quigley’s comments.

“I’m concerned and there seem to be two risks,” he said. “That the slot is an essential part of the design and . . . that you could end up with $660 million worth of satellite that can’t fly.”

A spokeswoman for Communications Minister Stephen Conroy said in a statement he was not concerned about the issue. “The government is satisfied that NBN Co has taken a prudent approach to its procurement of satellites and the delivery of the long-term satellite service,” she said.